Social Housing Speed Read – Extra charges
4th December, 2020
In August 2019, we reported on the case of Curo Places Limited v Anthony Pimlett – an appeal heard by the Upper Tier Tribunal in which it was considered whether or not a clause in a tenancy agreement could allow a landlord to add additional services and charge for them. We report further on this case here following its escalation to the Court of Appeal.
Click here for the previous article.
To summarise the matter thus far, Mr Pimlett had resided in a self-contained bungalow for older people since 2008. Mr Pimlett’s original landlord was Somer Housing Trust however, following a group merger, Curo Places became the landlord of the bungalow.
The original tenancy agreement with Somer Housing had set out specific services which would be provided in return for a service charge being payable. Though not set out in the tenancy agreement, grounds maintenance was provided by the landlord with no obligation being placed on the tenant to pay for such service.
The appellant housing association, Curo saw this service being provided for no extra costs as a problem and subsequently amended the wording in their tenancy agreements for future tenants, making ground maintenance a chargeable service. A couple of years later, Curo proposed to vary all tenancy agreements to include ground maintenance as an additional chargeable service. The clause in question stated, “the Trust agrees to provide the services (if any)…for which you pay a service charge providing that, subject to consultation with the tenant it may provide extra services if it believes this would be useful” (sub-paragraph (iii)).
Curo’s stance was that Mr P was now liable to pay for the ground maintenance he had received free of charge. Mr P subsequently challenged whether an additional charge was payable in the First Tier Tribunal. The FTT found that Curo were not entitled to recover this charge as the wording of the new clause provided for ‘extra’ services and Mr P had already been receiving the ground maintenance service at no additional cost. The service was therefore not deemed to be an addition.
Curo subsequently appealed to the Upper Tribunal arguing that the interpretation of the clause within the tenancy agreement was such that it “dealt with services for which there are specific charges and therefore should not prevent the charging services in respect of which there are no specific charges”. The Upper Tribunal did not find merit in this argument and followed the reasoning of the FTT.
Lord Justice David Richards took a different view, however.
The case pivoted on the meaning of “extra services” as contained within Mr P’s tenancy agreement and the Judge disagreed with the UTT’s interpretation. He stated:
“…the words “extra Services” in sub-paragraph (iii) are in my judgment governed by the opening words of that clause: “The Trust agrees to provide the Services (if any) listed in the Tenancy Agreement and for which you pay a service charge”. It seems to me inescapable that the services contemplated by sub-paragraph (iii) are those which are extra to the services listed in the Tenancy Agreement. There is no reference in clause 2.10.1, or elsewhere in the tenancy agreement, to services that are or were in fact provided by the landlord, as opposed to those that are listed in the agreement.”
The tenancy agreement allows the landlord, subject to consultation with the tenants, to vary certain terms, which extended to the landlord’s ability to add services if it believes this would be useful. Lord Justice David Richards did, however, state that:
“The landlord’s belief that the provision of the extra service would be useful must, of course, be genuine, and there must be genuine and prior consultation with tenants. The belief must also be rational and made after consideration of all obviously relevant considerations and the exclusion of all irrelevant considerations”.
It was also highlighted that, if the purpose of sub-paragraph (iii) were to enable the landlord voluntarily to provide extra services, it seems peculiar that it was mentioned in the tenancy agreement at all, and even more peculiar that a prior consultation with tenants should be necessary.
The Court therefore found in favour of the housing association and the appeal was allowed.
The full judgement can be found here.
If you have any questions on the above and how it will affect social housing providers, or any other questions as a social housing provider, please do not hesitate to contact John Murray or a member of our expert Social Housing Team.
Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.
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